Name: Date: Hr: Senior Consumer Compound Interest Excel ...

Name:____________________ Date:____________ Hr:_____

Senior Consumer Compound Interest Excel Worksheet

Instructions:

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Open the excel file ¡°Compound Interest Spreadsheet¡± on mrellismath. under Senior Consumer Files

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Right click and ¡°Save As¡± - ¡°YourNameHr.# Compound Interest Spreadsheet¡± (at the end, send me your file)

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This file will be used to quickly find simple and compound interest and calculate the advantages of investing in

different types of accounts.

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On the top row, label the columns in the following order: ¡°Principal ¨C P¡±, ¡°Rate ¨C r¡±, ¡°Compound # ¨C n¡±, ¡°Time ¨C

t¡±, ¡°Amount - P(1+(r/n))^(n*t)¡±, ¡°Interest Earned - I=A-P¡±, ¡°Simple Interest ¨C Prt¡±, and ¡°Advantage¡±

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¡°Principal ¨C P¡± ¨C Highlight this column and change the formatting to ¡°Currency¡±

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¡°Rate ¨C r¡± ¨C Highlight this column and change the formatting to ¡°Percentage¡±

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¡°Compound # ¨C n¡± and ¡°Time ¨C t¡± ¨C these need no other formatting

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¡°Amount¡± ¨C Using the formula provided for compound interest, enter the equation into the first cell. Make sure

to start the equation with an ¡°=¡± and to select each cell that corresponds to each piece of the formula. Also, use

the ¡°*¡± for multiplication, ¡°/¡± for division and put ¡°()¡± when needed.

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¡°Interest Earned - I=A-P¡± ¨C Using the formula provided for interest earned, enter the equation into the first cell.

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¡°Simple Interest ¨C Prt¡± ¨C Using the formula provided for simple interest, enter the equation into the first cell.

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¡°Advantage¡± ¨C Subtract the ¡°Simple Interest¡± cell from the ¡°Interest Earned¡± cell.

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Highlight the first row from ¡°Principal ¨C P¡± to ¡°Advantage¡± and, using the square in the lower right hand corner,

drag down and populate the 15 rows of questions.

Problems:

#1. You want to invest $5000 at 5% interest compounded semiannually for 5 years.

How much interest is earned?________________________

#2. You want to invest $2000 compounded semi-quarterly for 10 years @ 5.5%.

What is the advantage of compound interest over simple interest?______________________

#3-#5. You want to invest $10000 for 8 years and have three options (use #¡¯s 2-5). Option 1, 3.75% compounded

daily; Option 2, 4% compounded monthly; Option 3, 4.25% compounded quarterly.

What is the best option?(circle one)

Option 1

Option 2

Option 3

Name:____________________ Date:____________ Hr:_____

#6-#15. You have $1000 to invest @ 5.5% for 20 years. Use #¡¯s 6-15 to find the amount of interest earned when

your investment is compounded:

(#6) yearly __________________________

(#7) semiannually ____________________

(#8) quarterly _______________________

(#9) semi-quarterly ___________________

(#10) monthly _______________________

(#11) weekly ________________________

(#12) daily __________________________

(#13) compounded every hour _________________

(#14) compounded every minute _________________

(#15) compounded every second _________________

How much more money did you earn when compounded monthly than yearly? ________________

How much more money did you earn in #15 than in #14? ___________________

Extra Credit: How much do you think you¡¯d earn if your investment was compounded continuously? Why?

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